You may be considering leasing a vehicle but are not yet familiar with the requirements for car lease insurance, or how to get it. There are a few things you should know before acquiring your lease. Because the car you are leasing is still owned by your leasing company they will have specific guidelines. Even though you are ultimately responsible for the lease, it is in their best interest to have these guidelines in place to protect their investments. It shields them in the case of major damage to the vehicle that will lower the value of the vehicle or diminish the value. Most leasing companies will require the vehicle be covered completely so they don’t take a financial loss if the leaser is not able to come up with the difference.
When to Get Car Lease Insurance
When financing a leased vehicle, most commonly you are required to carry collision coverage, comprehensive coverage and liability for your car lease insurance. Collision coverage is coverage that pays for damage to the vehicle in the event of an accident. This coverage can have a insurance deductable which you will need to pay before the collision coverage starts. You can lower your premium costs if you pay more for your deductable and or pay less and have a higher premium. Comprehensive coverage pays for damage from theft, vandalism, fire, acts of god, or natural disasters. A deductible may also apply to comprehensive coverage. Liability covers bodily injury and property damage to other parties involved up to a certain amount. For example, if you were in an accident and it is stated to be your fault, your liability insurance will cover the other person’s medical bills, if any, and repairs to their vehicle or property. In the case of having a leased vehicle you may want to consider further insurance to cover your financial responsibility to the leasing company.
Adding Gap Insurance to Car Lease Insurance
Some leasing companies may also require you to carry Gap insurance as extra car lease insurance. Gap insurance covers the difference between the lease amount and the car value in any event that the car is damaged beyond repair. This is highly encouraged so that you and the leasing company are both protected. If there is any “gap” in your insurance, you won’t be left with out of pocket fees for a car that is now “totaled”.
Your leasing company also has the option to “total” the car if they deem it is in their best financial interest. You are then responsible to pay off the lease as per your agreement. Thus, Gap insurance is an extra option worth considering when shopping for car lease insurance.
Whether or not your leasing company requires Gap, check with your current insurance company to see if they provide Gap insurance at more competitive rates. Also check a few other insurance companies before you head to the leasing department for you vehicle. Become familiar with the going rates for Gap insurance and any other insurance your leasing company may offer or require. That way you are not pressured to obtain your insurance though the leasing company if you are not comfortable with their rates. Take all the information they give you that is required and compare for yourself.
You do not want to take on a whole new set of problems if your car is not repairable and you haven’t covered yourself financially. Not only will you then have the financial responsibility of a vehicle that is now “totaled” you won’t be able to start a new lease until that one is paid off.
The Downside of Car Lease Insurance
The unfortunate side to car lease insurance is that you could pay more than for regular car insurance. This is where you will want to make sure to shop around and compare prices and discounts. If you do have current insurance, first compare what you are paying to some other quotes to make sure you are getting a reasonable premium. Ask them about their discounts. A lot of people are unaware of the numerous amounts of discounts that are available and which discounts they are eligible for.
Car Lease Insurance Discounts
- Multi-car or multi-household discount
- Member organizations such as a teachers association or Costco
- A good driving record
- Defensive driving courses taken
- Mature driving experience
- Active or retired military member
- High academic records
These are the most common discounts offered. However check with various insurance companies to find out what they offer in conjunction with your car lease insurance. You might find your were paying more than needed with your current insurance company and find a much better deal.